The weak showing adds to a 127-point tumble on Tuesday that followed moves by China to curtail its economic growth.

The Canadian dollar moved up 0.74 of a cent to 96.96 cents US.

China's central bank is raising the proportion of deposits that banks must hold in reserve by half a percentage point to 15 per cent of their deposits. The People's Bank of China also raised the yield it is offering on its one-year bills, its second increase in interbank markets in a week.

China has been a big support to the Toronto market as its recovery boosts commodity sectors, which stand to gain from sales to China's resource-hungry economy.

But analysts point out that the losses this week come after a string of gains that pushed the TSX up almost two per cent last week alone.

"We have to remember we have been up quite strongly since the March '09 bottom," said Eric Brass, equity analyst at MFC Global Investment Management.

"This is really just a knee-jerk reaction to what the Chinese market is doing. People are perhaps using this as an opportunity to take some profits."

The TSX base metals sector was the biggest advancer, up about one per cent after sliding almost four per cent Tuesday as March copper on the Nymex was ahead six cents at US$3.41 a pound. Sherritt International (TSX:S) gained 11 cents to $7.44 while First Quantum Minerals (TSX:FM) gained $4.15 to $92.55.

The energy component was down slightly as the crude contract for February on the New York Mercantile Exchange declined 70 cents to US$80.09 a barrel after the U.S. Department of Energy reported bigger-than-expected increases in crude and distillate products last week, including heating oil. Crude oil supplies were up 3.7 million barrels in the week ended Jan. 8 against estimates of a gain of about one million barrels.

The gold sector was up 0.21 per cent as the February bullion contract in New York gained $7.40 to US$1,136.80 an ounce.

The consumer discretionary sector was also weak, with shares in auto parts maker Magna International Inc. (TSX:MG.A) down $2.34 to $60.05 after it said it expects its 2010 sales to be in a range of US$19.5 billion to US$20.5 billion, in line with 12 analyst estimates compiled by Thomson Reuters.

Corus Entertainment Inc. (TSX: CJR.B) shares declined 29 cents to $19.30 even as the company reported a $73.9-million profit in its fiscal first quarter, an 82 per cent improvement that came as advertising revenues began to rebound in November. Corus says its revenues also rose to $222.3 million from $216.8 million a year ago.

Elsewhere in the sector, Cogeco Cable Inc. (TSX:CCA) says it's raising most of its financial targets for 2010 as a result of steady performance at its Canadian operations and signs that its European subsidiary is stabilizing after a period of intense competition. Its shares climbed $1.79 to $36.51.

The TSX Venture Exchange rose 8.14 points to 1,585.3.

New York indexes moved higher after a disappointing earnings report from aluminum giant Alcoa Inc. sent indexes lower on Tuesday.

The Dow Jones industrial average moved 38.4 points higher to 10,665.7 as investors took in the latest economic assessment from the U.S. Federal Reserve.

Its so-called Beige Book says that although "economic activity remains at a low level, conditions have improved modestly further." However, the Fed also notes that "labour market conditions remained soft" in most of the Fed's 12 regions as the new year started.

The Nadaq composite index was up 19.39 points to 2,301.7 while the S&P 500 index climbed 6.65 points to 1,142.85.

In other corporate news, Kraft Foods, which is engaged in a hostile takeover bid for candy maker Cadbury, has boosted its full-year profit outlook for the second time in two months after logging strong operating gains. Kraft now anticipates 2009 earnings of at least US$2 per share, compared with a prior forecast for a profit of at least US$1.97 per share. Analysts surveyed by Thomson Reuters expect full-year earnings of US$2 per share, excluding one-time items and its shares were off five cents to $29.24.

Investors also examined Google Inc.'s threat to withdraw from China. The company said it will no longer censor its search results in the country after finding that hackers had led human-rights activists to reveal their email accounts to outsiders. In New York, Google shares were down $5.77 to US$584.71.